2021 (8) TMI 779 - HC - Money Laundering

Money Laundering - proceeds of crime - power of Directorate of Enforcement to declare any property acquired by proceeds of crime - Section 5(4) of the PMLA, 2002 - HELD THAT - A person who is interested relating to any immovable property or is claiming or is entitled to claim any interest in the property would be free to enjoy the said immovable property even if the same is attached. If the property is confiscated by the Central Government, such claimant with legitimate interest in the property or who may have suffered a quantifiable loss as a result of offence of money laundering may move appropriate application for restoration of such confiscated property or a part thereof - so far as interested person or any claimant is concerned, they did not have any locus to challenge the attachment order at all. While the statute protects them in some way but they have no say in respect to attachment which is essentially against the person who has procured the property by proceeds of crime. If such subsequent purchaser or interested person as explained under Section 5(4) is allowed to challenge the attachment, it would not only create a chaotic situation but it can be a method of subterfuge litigation by the main accused in getting himself let off in case relating to money laundering. The present petition filed by the interested persons to challenge the attachment order is found to be not maintainable as they did not have any locus standi to the said aspect - petition dismissed.

Summary

Issues:
Challenge to Impugned Order by Enforcement Directorate after RERA Order

Analysis:
The petitioners sought relief against the Impugned Order dated 25.06.2021 passed by the Enforcement Directorate following a case under the Prevention of Money Laundering Act, 2002 (PMLA, 2002) against the builders of a residential project. The petitioners argued that the Enforcement Directorate's order contradicted the order of the Rajasthan Real Estate Regulatory Authority (RERA) revoking the project's registration. The RERA order included detailed directions, such as revoking the project's registration, terminating the development agreement, and imposing conditions for project completion. The RERA order also addressed the role of the Enforcement Directorate in the project's financial matters.

The petitioners contended that the Enforcement Directorate's attachment order under the PMLA, 2002 was not valid as it conflicted with the RERA order. The court examined the provisions of the PMLA, 2002 related to property attachment and the rights of interested parties. It was noted that interested parties could enjoy attached property but had limited rights to challenge the attachment. The court emphasized that interested parties could not challenge the attachment order as it could lead to misuse by the accused in money laundering cases.

The court found that the petitioners, as members of the petitioner-association, did not have legal standing as registered purchasers of the property. However, the RERA order aimed to protect their interests, and the Enforcement Directorate's attachment did not interfere with the RERA order. The court held that the petition was not maintainable against the Enforcement Directorate's attachment order and advised the petitioners to seek appropriate forums for implementing the RERA order. Consequently, the writ petition was dismissed, and all pending applications were also dismissed.